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Financial default cover usually only applies if an airline has completely ceased trading due to financial reasons. Even if a policy includes this as standard, it may only apply if you buy your insurance less than a couple of weeks after you book your flights.
Some of the less expensive travel insurance packages do not offer insurance against airline bankruptcy as standard, so it is well worth your while checking the exact wording of the terms and conditions of your policy before committing to buy.
This type of cover will not protect you if your travel agency goes under, as travel insurance policies usually specify that financial default coverage only applies to travel suppliers, such as tour operators, airlines, and cruise lines, and not to the company that sold you your travel insurance.
If your trip consists of a number of journeys with different travel suppliers, then you will only be covered by financial default insurance if you miss your whole trip as a result of one company going under. So if you had booked a flight to Barbados to board a cruise ship, and the cruise company goes out of business, you would not be refunded for your flight.
You will need to check your policy documents to find out if there is a waiting period before the default coverage takes effect. Some policies state that the financial default of the travel supplier must take place at least a week after you have bought the policy in order for you to be covered.
Most insurance underwriters have a list of airlines that they are willing to insure, so make sure that the airline that you are travelling with is on this list before you buy any policy, or else your financial default cover will be worthless.
So if you feel that you need financial default protection, then make sure to buy your travel insurance as early as possible, read the policy documents thoroughly, and make sure that you buy it from an independent party, rather than direct from your travel supplier.
Article Source: http://www.articlemotron.com
Many people worry that the airline that they are travelling with will go bust before or during their vacation, leaving them out of pocket and in the lurch. Some, but not all, travel insurance policies offer compensation in the instance of an airline going bankrupt, so it is worth checking the details of a policy before you commit to it.
1stoptravelinsurance.co.uk provides cheap annual travel insurance with cover to travel as many times as you like for up to 45 days at a time.
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